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SEKUNJALO INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1996/006093/06
Share Code: SKJ ISIN: ZAE000017893
("Sekunjalo")
FINAL AUDITED RESULTS
for the year ended 31 August 2001
GROUP INCOME STATEMENT
Audited Audited
31 August 2001 31 August 2000
R000's R000's
REVENUE 270 125 319 469
PROFIT FROM OPERATIONS 18 301 18 426
Loss on investments 36 270 155 468
Finance cost 19 759 3 053
LOSS BEFORE TAXATION 37 728 140 095
Income taxation expense 1 307 6 207
LOSS AFTER TAXATION 39 035 146 302
Income from associates 50 2 353
Outside shareholders' interest 26 751 23 190
NET LOSS FOR THE YEAR 12 234 120 759
Weighted average number of shares 88 689 88 689
Headline earnings per share (cents) 0.21 12.09
Earnings/(loss) per share (13.79) (136.16)
Diluted earnings/(loss)
per share (cents) (13.22) (130.52)
Reconciliation between headline earnings
and net loss for the year:
Net loss for the year (12 234) (120 759)
Loss on investments (net of tax and
outside shareholders' interest) 11 741 130 409
Amortisation 487 869
Start-up costs 190 204
Headline earnings 184 10 723
GROUP STATEMENT OF CHANGES IN EQUITY
Non-dis Accu-
Share Share tributable mulated
capital premium reserves loss Total
R000's R000's R000's R000's R000's
2000
Balance at 31 August 1999 1 554 126 435 1 061 12 466 141 516
Fundamental error - - - (1 141) (1 141)
Restated balance 1 554 126 435 1 061 11 325 140 375
Disposal of subsidiaries/
associates - - (1 022) (440) (1 462)
1 554 126 435 39 10 885 138 913
Net loss from ordinary
activities - - - (120 759) (120 759)
Share issue expenses - (152) - - (152)
Balance at 31 August 2000 1 554 126 283 39 (109 874) 18 002
2001
Balance at 31 August 2000 1 554 126 283 39 (109 874) 18 002
Fundamental error - - - (402) (402)
Restated balance 1 554 126 283 39 (110 276) 17 600
Net loss from
ordinary activities - - - (12 234) (12 234)
Balance at
31 August 2001 1 554 126 283 39 (122 510) 5 366
GROUP BALANCE SHEET
Audited Audited
31 August 2001 31 August 2000
R000's R000's
ASSETS
Non-current assets 131 858 193 563
Property, plant and equipment 64 819 64 833
Goodwill and intangibles 18 325 71 361
Pharmaceutical dossiers 32 300 34 000
Investments 9 720 11 011
Loans receivable 5 596 12 358
Deferred taxation asset 1 098 -
Current assets 113 992 132 483
Inventory 36 334 48 449
Contract work in progress 7 227 2 552
Trade and other receivables 56 369 72 568
Cash and cash equivalents 14 062 8 914
TOTAL ASSETS 245 850 326 046
EQUITY AND LIABILITIES
Capital and reserves 5 366 17 600
Share capital 1 554 1 554
Share premium 126 283 126 283
Non-distributable reserves 39 39
Accumulated loss (122 510) (110 276)
Outside shareholders' interest 50 915 78 969
Non-current liabilities 84 089 79 768
Deferred taxation liability - 5 580
Interest-bearing borrowings 83 455 73 782
Shareholders' loan 634 406
Current liabilities 105 480 149 709
Trade and other payables 53 418 53 937
Deferred purchase consideration - 48 790
Current portion of interest-bearing
borrowings 25 802 11 531
Bank overdraft 20 066 28 533
Taxation 6 194 6 918
TOTAL EQUITY AND LIABILITIES 245 850 326 046
ABRIDGED GROUP CASH FLOW STATEMENT
Audited Audited
31 August 2001 31 August 2000
R000's R000's
CASH FLOW FROM OPERATING ACTIVITIES 52 326 52 876
CASH FLOW FROM INVESTING ACTIVITIES 7 376 (85 640)
CASH FLOW TO FINANCING ACTIVITIES (46 087) (5 730)
Net increase/(decrease) in cash
and cash equivalents 13 615 (38 494)
Cash and cash equivalents at
beginning of year (19 619) 18 875
Cash and cash equivalents at
end of year (6 004) (19 619)
GROUP PROFILE
It has been two years since Sekunjalo Investments Limited listed on the
JSE Securities Exchange South Africa. During this period, the group faced
many challenges, particularly in the 12 months under review.
The year began with a substantial loss on our investment in LeisureNet,
owner of the former Health & Racquet fitness chain, as accounted for in
2000. In order to stabilise the group in the face of the loss, the board of
directors undertook a process of short-term financial restructuring. This
included the rationalisation of the group's healthcare and fishing
subsidiaries to make them more globally competitive, the disposal of non-
core assets, the closure of operations which had been consistently
underperforming and the strengthening of management teams within the
subsidiaries. Although the restructure impacted on group operations in the
short term, we are confident that the end result will show increased
sustainable profitability and efficiency in the years ahead. The positive
turnaround in the second half of the financial year under review bears
testimony to this belief.
During the year, the group also adopted a growth model which emphasised
strong cash flows, risk diversification, decentralised management, pooling
of resources at corporate level and the alignment of the group's operational
and financial strategies. The strategic impetus underpinning this business
model is a drive to increase awareness of the already strong branded product
range and growing export earnings which serve as a significant rand hedge.
The sustainability of the growth model centres on the recapitalisation of
the group which should position it to deliver strong financial performance
in the forthcoming year.
GROUP FINANCIAL OVERVIEW
While financial constraints imposed by the loss incurred on our
investment in LeisureNet undoubtedly impacted on our group financial
results, we are pleased to report that Sekunjalo has produced positive
headline results for the year under review.
The first six months of trading saw the costs of the restructuring
process have an adverse effect on group performance. However, strong demand
for our products overseas underpinned by a weaker rand resulted in
significant export earnings.
Group headline earnings of R184 000 were achieved for the period with an
annual turnover of R270 million and an operating profit of R18,301 million.
The group, as anticipated, significantly improved performance during the
second half of the year from an interim headline loss of 17 cents per share
for the first six months to a profit of 0.21 cents per share for the year.
We are confident that this positive trend will continue in the coming year,
as the impact of changes in the group become more apparent.
REVIEW OF INVESTMENTS
Sekunjalo Health Care ("SHC")
An executive management team, comprising Dr Vincent Msibi as Executive
Chairman, Muzi Nkosi and Themba Mlati, has been appointed to oversee the
Sekunjalo Health Care operations. Under its leadership, the division
management team has successfully restructured many of the SHC subsidiaries
during the period under review.
Promex continues to be a market leader in the manufacture and supply of
strongly branded hypodermic syringes, needles and related products. It is
highly competitive and has successfully entered the export market.
Rapimed, with its branded product, URICHECK, is the market leader in the
manufacture and distribution of rapid diagnostic products. Rapimed currently
exports to Africa, South America, and the Middle East and will continue to
explore export opportunities.
Sekpharma has focused on the penetration of the pharmaceutical market
with the 17 pharmaceutical dossiers acquired from Glaxo Smith Kline and
sales have consistently increased despite the adverse trading environment.
In the two years since Sekunjalo Medical Logistics ("SML") was awarded
the tender for the warehousing and distribution of medical and
pharmaceutical products by the Northern Cape Province, they have effectively
become its supply chain manager. Utilising a SAP IT system, SML has
successfully introduced an e-commerce platform that has accelerated the
procurement process and considerably reduced government spend and
stockholding.
Health Systems Technology ("HST", formerly Systec) continues to provide
hospital IT systems to the Provincial Administration of the Western Cape
("PAWC") after being awarded the contract in 1999 for a period of 5 years.
An important milestone was reached when HST passed the PAWC initial
acceptance test for delivery of the first phase of the project.
The group restructuring resulted in the disposal of SA Biomedical during
the year under review, as this company no longer fitted the core focus of
the group.
Sekunjalo Industrial Investments
Premier Fishing
Premier Fishing, the only major black controlled and managed fishing
company, has delivered strong performance, exceeding budget forecast at the
operating profit level. This is primarily due to the strong export component
of Premier Fishing's business which accounts for more than 50% of turnover.
The depreciation of the Rand saw consistent growth in export sales to the
USA, Europe and the Far East and the establishment of a new customer base in
Japan.
In the local market, emphasis has been placed on continually building the
branded Peck's Anchovette and Redro products. Extensive research and
development has been done on Seagro, one of a few branded organic
fertilisers, with a view to expanding its use in the local market.
There has been greater stability in the fishing industry in the past year
due to the Minister of Environmental Affairs and Tourism "rolling over"
rights which were held in 2000 and 2001, resulting in the industry being
able to commence fishing activities timeously.
Increased demand for fishing products combined with long-term rights
allocations means that Premier Fishing is well poised to sustain its good
performance in coming years.
Agrid
Sekunjalo, after being closely involved with its overseas partner Agrid
International in setting up Agrid S.A. in Atlantis, disposed of this
investment as it no longer fitted into the core focus. However, Sekunjalo
was pleased to facilitate foreign direct investment through the development
of the Agrid plant which created jobs and a sustainable business in an area
where unemployment levels are high.
Sekunjalo Information Technology
Semtech, the software product developer specialising in manufacturing,
workflow and web accounting, has carved out niche markets in the agri-
chemical distribution, manufacturing efficiency measurement and warehouse
control management industries. Given the nature of the development cycle of
software products, the company is at the stage where its cutting edge
products will rapidly penetrate target markets in the months ahead.
THE YEAR AHEAD
As a result of the restructuring exercise, the group has a leaner, more
efficient structure. We look forward to continued growth while prospects for
the group and its operating subsidiaries look promising.
The recapitalisation agreement between the controlling shareholder of
Sekunjalo (Sekunjalo Investments Holdings (Pty) Ltd) and a broad-based
empowerment consortium comprising several leading empowerment companies, is
vital for the group's growth and sustainability. The group is currently
trading under a cautionary relating to this transaction.
Sekunjalo remains committed towards the recovery of funds invested in
LeisureNet and is in discussion with its advisors in this regard.
APPRECIATION
This has been a difficult and challenging year for Sekunjalo. We wish to
take this opportunity to express our appreciation to the directors,
management and staff for their ongoing dedication, enthusiasm and hard work
in a tough year.
By order of the Board
Adv WA Mgoqi Dr. MI Surve'
Chairman Chief Executive
Cape Town
26 November 2001
Directors
Adv WA Mgoqi* (Chairman), Dr MI Surv (Chief Executive Officer), MY Kajee CA
(SA) (Company Secretary), RA Seria*, AJ Snyders*, KC Patel*, Z Kota*, D
Case* *Non-executive Directors
Registered Address: Transfer Secretaries:
70 Rosmead Avenue Computershare Services Limited
Kenilworth Edura House, 41 Fox Street
7708 Johannesburg 2001
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